Kansas returns $31.5M health grant

Kansas is returning a $31.5 million grant to lead the way on exchange development, marking one of the largest rejections of federal money to implement a piece of health reform.

Kansas will send back to HHS an Early Innovator Grant it was awarded in February to build technology infrastructure for the exchanges that other states could use as a model.

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Two of the seven states that have received the grants have now returned them. Oklahoma Gov. Mary Fallin turned back a $54 million grant in April after mounting pressure from state GOP lawmakers. A handful of states have meanwhile rejected $1 million grants to help plan health exchanges.

"There is much uncertainty surrounding the ability of the federal government to meet its already budgeted future spending obligations,” Kansas Gov. Sam Brownback said in a statement. “Every state should be preparing for fewer federal resources, not more. To deal with that reality Kansas needs to maintain maximum flexibility. That requires freeing Kansas from the strings attached to the Early Innovator Grant.”

Brownback, who met with key legislators Tuesday morning before making the announcement, may have telegraphed the move in May when he directed Insurance Commissioner Sandy Praeger to slow down the implementation timelines she proposed in the state’s Early Innovator Grant application. Brownback asked Praeger to delay a RFP for vendors to build parts of the health exchange, scheduled to go out in July.

Like many Republican-led states, Kansas is weighing how to move forward on an exchange. While many are not enthusiastic about implementing a key piece of the Affordable Care Act, they’re less thrilled with the idea of HHS running an exchange in the state if they fail to act. Praeger, also a Republican, is the chairwoman of Health Insurance and Managed Care Committee of the National Association of Insurance Commissioners. She has been an enthusiastic proponent of exchanges.

Kansas and Oklahoma have staked the position that accepting the Early Innovator Grant would have attached too many federal requirements to their states’ exchanges. Fallin, who had initially touted Oklahoma’s Early Innovator Grant, later framed her decision to return the money as an opportunity to build an exchange on the state’s terms.